SC2 E-Sports: A bubble it is not

By Alfred Yim, Staff Writer

As an adherent to market timing strategies, seeing my carefully thought-up predictions implode in the silver and gas/oil equipment markets brought me much angst throughout the year.  Luckily, I had engaged in a long call of sorts over a certain real time strategy PC war game – Starcraft 2. I had a free lunch going my way if my predictions of SC2’s scene begin to flourish.

Luckily for my thriftiness, Starcraft 2 by Activision Blizzard has indeed experienced substantial growth in its E-Sports niche. In times where tremendous success and growth are met with bubble fears (see LinkedIn’s IPO which valued the company at 41 times revenue), I’d like to think there exists at least something that can be viewed without too much cynicism.

There’s been steadily growing hype and excitement about the E-sports sector-and it is not just fluff or propaganda. Take, for example, Steven ‘Destiny’ Bonnell, who according to a Forbes article, admits to making a comfortable living off of gaming, allowing him to own a house and support an infant son. To note, this man has not put out major tournament wins or anything eye popping of that sort (though still a very competent player) but is making his money from coaching interested players, and running ads on live streams of his daily gaming sessions (which frequently garners thousands of viewers).

This is akin to me picking up a basketball and making bank… though that assumes that I am both good at the sport and have an electrifying style to go with it. My athletic fantasies aside, the point is that individuals like Steven would not be successful without the existence of a foundation – bedrock if you will – of underlying SC2 E-sports interest.

This ‘bedrock’ carries over to corporations as well. However, corporate involvement in what is essentially competitive video gaming (with the purpose of becoming a spectator event akin to traditional ‘sports’) is not new. This alternative expression of athleticism has had a foothold since the early 2000s; however SC2’s E-sports growth, I’d say should be considered a different and more robust beast.

Corporate interest, online viewership, and professional player feasibility sets this spate of growth apart like no other time in the past. Corporate interest and user/spectator interest are built upon the fact that professional players are both interested in putting on a show and are able to sustain themselves while pursuing their craft. The feasibility of this certainly exists with today’s technology and the existence of personal online streaming and coaching demand. Players have a variety of revenue sources to support themselves in addition to any tournament prize money (a few of which are mentioned below) and sponsorship revenue.

1. The Global Starleague tournament in South Korea where an 87,000 US dollar prize was given for a first place finish (now $40,000 – though nothing to laugh at for a month long tournament)

2. In North America, tournaments such as the North American Star League offer $100,000 dollar prize pools for each season (each season lasting approximately 3-4 months).

3. Even IGN Entertainment has gotten into the action with its own league called the IPL. Despite a smaller prize pool size, IGN’s participation is a healthy sign of SC2’s prospects; due to the fact that it is a subsidiary of News Corporation owned by none other than Rupert Murdoch.

4. In Europe’s case, tournaments in Sweden such as DreamHack have offered prize pools of approximately $27,000 CDN for a 3 day event.

This is not even mentioning the smaller tournaments/events occurring daily further signifying the intense amount of interest on the end user side. Each of these smaller events and the big ones mentioned also have staggering online viewership, with as many as 20,000 people per night in the North American Starleague’s case.

Streams of live matches featuring professional players frequently reach over 10,000 depending on who is in it of course. More dizzying numbers are reached during final matches of tournaments with upwards of 70,000 viewers (the final of the Teamliquid Starleague tournament).  With such user and consumer interest, companies are definitely taking notice, including companies like IGN, Intel, Razer, Monster (energy drinks), Coca-Cola, and Sony Ericsson.

With the combination of high user demand for broadcasted professional matches, the companies willing to invest in professional teams and tournaments as a marketing initiative and of course the professional players, Starcraft 2 as an E-Sport still has more growth ahead of it. If only the same thing could be said about my stock picks…

ARB Team
Arbitrage Magazine
Business News with BITE.

Liked this post? Why not buy the ARB team a beer? Just click an ad or donate below (thank you!)

Liked this article? Hated it? Comment below and share your opinions with other ARB readers!